Proprietary+Institutions

= = =FINANCIAL AID AT PROPRIETARY INSTITUTIONS = = =  //“I have gone to both a traditional college as well as a proprietary. In my opinion, my financial aid experience at both is dramatically different. I found that at a traditional college, the financial aid process was confusing and was handled as if you were in line at the bakery or deli. You choose a number, you're number is called, you order, and you are sent on your way to pay for your order. There is lack of customer service, no questions were answered, no personal attention of any kind. In addition, you are treated as just another number, not as a valued student trying to better your education //."

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//Whereas, in this school my experience is much different, my financial aid experience is excellent, dare I say, spectacular!! The advisors care about their students not only gaining funding for their education but being as successful as they can be. Every semester they are checked up on and made aware of their financial situation. The advisors go above and beyond to make sure their students are educated on the financial aid process, why their funding is set up in a certain way, and is treated with respect. A traditional college and their advisors lack this type of customer (student) service.” // // Rozana Jiawan // // Student at the International Academy of Design and Technology //

= = **//__Florida Statute 1005.02 - Definition of Proprietary Institutions__//** //“Any postsecondary education institution that operates in this state or makes application to operate in this state, and is not provided, operated, and supported by the State of Florida, its political subdivisions, or the Federal Government.”// toc

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HISTORY
The history of proprietary schools began in Golden Age of Greece, where teachers started their own private schools. In the early Renaissance, private instructors were hired to teach merchants the method of double-entry bookkeeping. During the nineteenth century, proprietary business schools began to open across America.

Then in the twentieth century**,** the movement of publicly funded colleges and vocational institutions severely undercut the proprietary schools’ share of the market. Lastly, the mid-1970’s brought the resurgence of proprietary schools, primarily because of the 1972 re-authorization of the Higher Education Act. Due to this Act, proprietary schools benefited from increased amount of student aid. Average Year-to-Year Growth by Institution Type, page 8 media type="youtube" key="nvr_L_jMC14" height="268" width="448"

In the state of Florida, the proprietary schools are governed by The Commission of Education (CIE). The CIE regulates consumer protection, degree and diploma program approval, program improvement, and licensure.

The proprietary schools offer the following programs: - College credit degrees and certificates - Vocational credit certificates and diploma - Apprenticeship - Continuing workforce education programs

The state of Florida has over 500 proprietary schools licensed by Commission of Independent Education. //List of CIE Schools//

Types of financial aid
Students who have chosen career-oriented programs, which chose to attend public institutions, have more access to financial aid than those students, which attend proprietary institutions. This is due to aid availability based on the length of the program and type of institution they attend. Secondary to limitations on aid, generally students in career-oriented programs have more access. <span style="font-family: Verdana,Geneva,sans-serif;">Students in Career Education Programs Have Access to Multiple Types of Financial Aid, Exhibit 7, OPPAGA Report 10-18, page 10

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<span style="font-family: Verdana,Geneva,sans-serif;">**Structure of financial aid at proprietary and non-profit institutions**
<span style="font-family: Verdana,Geneva,sans-serif;"> Financial aid is a core department in proprietary institutions because the nature of the student body, the high cost of their tuition, the retention of students, the maintenance of the good health of the private and government sponsored loans assigned to the students, and the customer service perception by the students. As a core financial department, financial aid is part of the Student Finance department. This department report directly to the controller who reports directly to the president of the institution as you can see in the organizational chart below:



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International Academy of Design and Technology, 2010 **

In order to provide financial aid services for approximately 2500 students, the International Academy of Design and Technology has 6 different positions and 8 employees in the Student Finance department. On the other hand, public institutions who have different tuition conditions such as lower price tags, different student related challenges such as participation in extracurricular activities, and different sources of financial aid such as private grants, have larger and hierarchical structures. For example, at the University of Central Florida, the department of Student Financial Assistance belongs to the office of Strategy, Marketing, Communications, and Admissions (SCMA). This office reports directly to the president. The department of [|Student Financial Assistance] has 53 people organized in 20 different positions.

In conclusion, for-profit institutions perceive financial aid as a profit unit which must provided enough resources to achieve the investor’s financial goals. For public non-profit institutions, financial aid is a marketing and strategic unit which helps to achieve the institution social and enrollment goals, because the financial goals are on the hands of the government’s allocations and private donors. For more information about public-non-profit financial aid organizational structures visit: [|University of Florida] office of the Vice-president of Students affairs [|University of South of Florida] [|Florida State University] [|University of North of Florida]

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<span style="font-family: Verdana,Geneva,sans-serif;">**Costs to attend a proprietary institutions and a non-profit institution**
<span style="font-family: Verdana,Geneva,sans-serif;"> The primary motivation of a for-profit institution is generate revenue for its investors. Because of this, for-profit institutions do not have a large list of private and public corporations willing to donate money to support their activities (Tabachow,2010). Considering that Tuition is “the name of the revenue-seeking game” (Tierney and Hentschke, 2007, pg. 148), and that for-profit institutions have a lesser need of student development services such as wellness center, physical libraries, large laboratories, counseling centers, housing; one must think that the cost of attending to this kind of institution is relatively lower than attending a non-profit institution. However, data from 2007-2009 shows that the differences in cost between non-profit and for-profit are not as big as one can consider. For more information about this topic visit: For-Profit Higher Education BY THE NUMBERS

<span style="font-family: Verdana,Geneva,sans-serif;">**How proprietary institutions are financed**
<span style="font-family: Verdana,Geneva,sans-serif;"> In order to have access to federal resources to support students through Financial Aid under the Title IV of the Higher Education Act (HEA; P.L. 89-329, as amended by P.L. 105-244), for-profit institutions must get at “least 10% of school revenue from non-Title IV funds” (Policy Archive, January 2005) In addition, these institutions do not have access to private grants other than the ones created by their own institutions or associations such as the Imagine America Foundation. In consequence every single student enrolled in a for-profit institution must pay at least 10% of his/her tuition with his own resources, private loans, or institutional loans. All of this means that for-profit institutions depend greatly on monies from tuition, and from the stock market to achieve their financial goals. One example of how well for-profit institutions have been performing is the fact that Career Education Corporation (the group that owns IADT) reported a 2 billion dollar profit for the 2009 fiscal year (Tabachow, 2010). If you want to know more about how for-profit institutions perform in the stock market visit:

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<span style="font-family: Verdana,Geneva,sans-serif;">How recent changes to the Direct Student Loan Program will impact financial aid services.
<span style="font-family: Verdana,Geneva,sans-serif;">In an interview with the Director of Financial Aid services at the International Academy of Design and Technology Daisy Tabachow, when asked to comment on how the new policies with Direct Student Loans will impact your procedures ans services, she replied:

<span style="font-family: Verdana,Geneva,sans-serif; font-size: 60%;"><span style="font-family: Verdana,Geneva,sans-serif; font-size: 9.9pt;">"I sincerely do not see a huge difference as to the pros and cons of going into the Direct Loan Program whether you are a traditional 4 year school or a proprietary. Both types of schools will lose any benefits they may have been given in the past such as lower interest rates for their private loans since going Direct means the banks lose the subsidies they received from guaranteeing student loans. Since the banks lose this money, and for the major players-Bank Of America, Wachovia, Chase—we are speaking of a minimum of a million dollars-they can no longer afford to lend money to students at a lower rate-who suffers most in this deal is the student who needs the alternative loan/private loan to cover the gap the federal Stafford loans will not. This of course affects proprietary schools more than the traditional as their tuition is higher. A fallout we do expect as a result of the new law is lower enrollments. We run into affordability issues-why go to a proprietary school when if you go to a 4 year traditional-your Pell and Stafford loans can cover your tuition and housing in most cases. Proprietary schools will now be competing with traditional schools for students in a much larger battle-they really need to sell their value when enrolling students. Less students can have a negative affect as less students mean less revenue –less revenue means cuts-whether it’s in the programs we offer, the people we hire or the extra services we provide to the students. The proprietary schools will face a challenge to stay alive but it is one, I truly believe they can achieve. <span style="font-family: Verdana,Geneva,sans-serif; font-size: 11pt;">"

<span style="font-family: Verdana,Geneva,sans-serif; font-size: 10pt;">She added:

<span style="font-family: Verdana,Geneva,sans-serif; font-size: 9.9pt;">"The benefit of this goes directly to the student[.] They receive the same Stafford loans [that] they received from the banks, and because there is no subsidy which needs to be paid the interest now charged on these loans can be lowered. This new program also allows the student not to pay any more than 10% of their income once they enter repayment."

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<span style="font-family: Verdana,Geneva,sans-serif;">Resources for financial aid at proprietary institutions
<span style="font-family: Verdana,Geneva,sans-serif;"> Proprietary institutions are often limited in the financial aid they are able to offer students at their institutions. In the state of Florida, according to the Office of Student Financial Assistance (OSFA), the following are resources offered in many of the proprietary institutions currently operated in the state: Robert C. Byrd Honors Scholarship Scholarships for Children and Spouses of Deceased or Disabled Veterans and Service Members Jose Marti Scholarship Florida Student Assistance Grant Bright Futures Federal Student Loans Private Alternative Loans - vary depending on bank. This is an example of Bank of America’s site.

Not all states provide financial aid to students going to proprietary institutions; however, some states have some resources. To learn more about states that provide financial aid for proprietary institutions visit: Survey Analysis: State Statutes and Regulations Governing the Operation of Degree-Granting For-Profit Institutions of Higher Education

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<span style="font-family: Verdana,Geneva,sans-serif;">Financial aid process at proprietary institutions
<span style="font-family: Verdana,Geneva,sans-serif;"> The process for applying for financial aid at a proprietary institution can vary by school; the one item they all have in common is the process begins with the filing of the FAFSA. Once the FAFSA is filed and the students Expected Family Contribution (EFC) is determined, grant eligibility is established. Need and non- need based aid is also determined and many times met through the use of Federal Student Loans, and sometimes supplemented by Private Alternative loans. The filing of the FAFSA often times determines the state aid available to the student.

<span style="font-family: Verdana,Geneva,sans-serif;">Student support services provided by the financial aid departments at proprietary institutions
<span style="font-family: Verdana,Geneva,sans-serif;"> When attending a proprietary institution, there are many resources and support services available to the student. Since a proprietary institution is for-profit, it is imperative that the loans are being paid back and the default rates are staying low. The financial aid office at a proprietary institution will do whatever it can in order to make the student is successful in repayment of their debt. The FA officers will meet with the students on a semester basis, they provide workshops in order to inform the students of their options to repay the loans, as well as work with a student if they find themselves in a financial hardship in order to stay out of default.

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<span style="font-family: Verdana,Geneva,sans-serif;">IMPACT OF FINANCIAL AID FOR PROPRIETARY INSTITUTIONS ON HISTORICALLY MARGINALIZED STUDENT POPULATIONS IN FLORIDA
<span style="font-family: Verdana,Geneva,sans-serif;"> Proprietary or career colleges have been increasing enrollment dramatically for quite some time. Between 1995 and 2004 for-profit colleges increased enrollment by 253% (Nunley, 2007). Career colleges have been successful and increasing their enrollments so dramatically in part because of their focus on recruiting non-traditional aged students and minorities. Enrollments of students aged 40 and older during the same time frame 1995-2004 increased by 376% (Nunley, 2007). In the fall of 2006, 43% of students enrolled at career colleges were minorities, most of which were African American and Hispanic (CCA, 2008). There are many reasons why minorities may be drawn in higher proportion to career colleges, Mark Robbins from the Career College Association stated in an interview that the minority student population is under served by traditional higher education and that professional schools allow these students to get into career ladders more quickly (Pekow, 2007).

Proprietary institutions serve a smaller population of students in Florida than do public institutions. Despite the smaller population, proprietary institutions have increased accessibility to higher education for more historically marginalized populations and non-traditional aged students. Within the population of students that attend proprietary schools in Florida, there are a larger proportion of minorities and non-traditional aged students than that of public institutions in Florida.

Non-traditional aged students have been draw to career colleges for a number of reasons. The ability to create flexible schedules, pursue career specific degrees and the ability to pursue degrees online all may contribute to the increased proportion of non-traditional aged students. Aside from the convenience of a career college the non-traditional aged student may feel more like a regular student at proprietary institutions because of the more diverse student demographic.

Women in higher education have been an ever-increasing proportion of the student body. This is a true statement for women in career colleges in Florida as well. As seen in figure 2 below, white women, Hispanic women and black women make up the three largest portions of proprietary institution student groups.

Figures 1-4 drawn from data collected through the National Center for Education Statistics, point towards the ability of proprietary institutions in Florida to create a more diverse student body. The data are derived from fall 2007 enrollment figures in Florida public and Private, for-profit institutions. These figures include undergraduate totals in all institutions that grant degrees or certificates in four or less years and participate in Title IV funding. Total enrollment for fall 2007 by institution type and student demographics can be found in table 1.



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 * = <span style="font-family: Verdana,Geneva,sans-serif;">[[image:FL_enrollment_by_race.png width="487" height="409" align="center"]]
 * = <span style="font-family: Verdana,Geneva,sans-serif;">Figure 1: Population distribution by race ||


 * = <span style="font-family: Verdana,Geneva,sans-serif;">[[image:Figure_2.png width="490" height="392"]] ||
 * = <span style="font-family: Verdana,Geneva,sans-serif;">Figure 2: Enrollment percentage by race and gender ||


 * = <span style="font-family: Verdana,Geneva,sans-serif;">[[image:Figure_3.png width="499" height="416"]] ||
 * = <span style="font-family: Verdana,Geneva,sans-serif;">Figure 3: Enrollment percentage by race and gender ||


 * = <span style="font-family: Verdana,Geneva,sans-serif;">[[image:Figure_4.png width="506" height="365"]] ||
 * = <span style="display: block; font-family: Verdana,Geneva,sans-serif; font-size: 10pt; text-align: center;">Figure 4: Enrollment distribution by age ||

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<span style="font-family: Verdana,Geneva,sans-serif;">How financial aid effects enrollments
<span style="font-family: Verdana,Geneva,sans-serif;"> Financial aid plays a huge role in students’ ability to pay for any higher education degree and this is especially true with regard to proprietary institutions. Proprietary institution financial aid offices are ever-present part of the student’s life at a career college. In and interview with Daisy Tabachow, Financial Aid specialist at the International Academy of Design in Orlando, a proprietary institution, she stated that the financial aid office is much more connected with students, the actively seek students to resolve issues and help students get through the entire application process (Tabachow, 2010).

With the average cost of tuition at a for-profit institution the lack of financial aid for students would further limit the amount of students willing and able to afford the cost of a degree. The benefits of a focused, accelerated curriculum is what draws many students to the proprietary institution and without financial support through grants and loans, only the most affluent students would be able to afford the cost of tuition. Figure 5 show the average cost of public and proprietary institutions.

<span style="font-family: Verdana,Geneva,sans-serif;">
 * = <span style="display: block; font-family: Verdana,Geneva,sans-serif; font-size: 10pt; text-align: center;">[[image:Figure_5.png width="522" height="391"]] ||
 * = <span style="font-family: Verdana,Geneva,sans-serif;">Figure 5: Average cost of Florida HE tuition ||

The overwhelming majority of students in Florida that attend a proprietary institution receive financial aid of some sort. Many of the same types of financial aid available to students at the public institution are available at proprietary institutions. The success that career colleges have had in recruiting minority students, non-traditional aged students and the lower socioeconomically secure student is in a large part due to the ability of the institution to procure student aid in the form of federal, state and local grants and loans. The major difference between financial aid from the students perspective is that the money does not go nearly as far as it would at a public institution. It is precisely for this reason that a huge percentage of students, more than 85%, get student loans to help pay for the cost of the education. Figure 6 shows a distribution of the type of student aid that is received by students who receive any amount of financial aid for proprietary and public education. Data for this graph was derived from the NCES. It is a combination and average of the three cohorts including 2005-06, 2006-07 and 2007-08, the three most current years the data was available for. The total number of proprietary institutions N=180, and public institutions N = 77.



There is a major difference in aid awarded in all the categories of aid listed here. The percentage of students needing loans is most likely die to the average cost of tuition. In the interview with the financial aid specialist, Tabachow stated that most often when students that receive institutional based aid are near completion of there degrees and are offered if student is considering leaving or as incentive for the student to finish up to be counted as a “completer” (Tabachow. 2010). As shown in figure 6 there is a huge disparity in the amount of state/local grant aid is awarded to students. The amount of federal grant aid may seem surprising but may also indicate that indeed students lower on the socioeconomic scale are attending proprietary institutions. Reporting of numbers of students receiving the Federal Pell grant was not available until the 2007-08 school year and so it was not shown as its own category on the chart below. But NCES data show that nearly half, 48.75% of all students receiving aid in the fall of 2007 at Proprietary institutions in Florida were receiving Pell grants, while only a quarter 25.07% of students at public institutions received the Pell grant.


 * [[image:Figure_6.png width="523" height="371"]] ||
 * <span style="display: block; font-family: Verdana,Geneva,sans-serif; font-size: 10pt; text-align: center;">Figure 6: Student aid type by % ||

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<span style="font-family: Verdana,Geneva,sans-serif;">REFERENCES
<span style="font-family: Verdana,Geneva,sans-serif;">2009 Florida Statute 1005.21. “Commission for Independent Education.” Online Sunshine. The Florida Legislature. Web. 14 April 2010. [|http://www.leg.state.fl.us/statutes/index.cfm?mode=View Statutes&SubMenu=1&App_mode=Display_Statute&Search_String=1005.21&URL=CH1005/Sec21.HTM]

2009 Florida Statute 1005.02. “Definitions.” Online Sunshine. The Florida Legislature. Web. 14 April 2010. [|http://www.leg.state.fl.us/statutes/index.cfm?StatuteYear=2009&AppMode=Display_Results&Mode=Search Statutes&Submenu=2&Tab=statutes&Search_String=1005.02]

Career College Association (CCA) __ www.career.org __

Career Colleges Association (CCA) (2008). The 2008 Fact Book: A profile of career colleges and universities. //www.imagine-america.org//. Retrieved on 04/11/10 from [|www.imagine-america.org]

Coleman, James and Vedder, Richard. “For-Profit Education in the United States: A Primer.” (2008). Center for College Affordability and Productivity. Web. 15 April 2010. []

Education Commission of the States (ECS) (200). Survey Analysis: State Statutes and Regulations Governing the Operation of Degree-Granting For-Profit Institutions of Higher Education. __ http://www.ecs.org/clearinghouse/14/48/1448.htm __. Retrieved on 04/16/2010

Elwell, Tim. Office of Program Policy Analysis and Government Accountability (OPPAGA). //“Public Career Education Programs Differ From Private Programs on Their Admission Requirements, Costs, Financial Aid Availability, and Student Outcomes.”// Report No. 10-18 (2010). The Florida Legislature. Web. 10 April 2010. []

Elwell, Tim. Telephone Interview. 14 April 2010.

Florida Department of Education: Council of Independent Education (2010). Office of Student Financial Assistance FDOE (2010). []

Florida Department of Education Office of Student Financial Assistance FDOE (2010). //Florida student scholarship and grant programs website.// []

Library of Congress (2005) Institutional Eligibility and the Higher Education Act: Legislative History of the 90/10 Rule and Its Current Status. Policy Archive []

National Center for Education Statistics -Integrated Postsecondary Education Data System. @http://nces.ed.gov/ipeds/

Nunley, Charlene (2007). Community colleges may be losing their edge in educating adults. //The Chronicle of Higher Education//. Retrieved on 04/11/2010 from []

OHE (2007). Statewide Plan for Higher Education 2004-2012 Proprietary Colleges. [|http://www.highered.nysed.gov/swp/page8.htm.Retrieved 04/15/2010]

Pekow, Charles (2007). For-Profit schools popular destination for minorities. //Diverse: Issues in Higher Education//, 15575411, 2/8/2007, Vol. 23, Issue 26. Retrieved on 04/11/2010 from []

Tierney W, Hentschke G (2007). New Players, Different Game: Understanding the Rise of For-Profit Colleges and Universities. The Johns Hopkins University Press. Baltimore.

Tabachow, Daisy (2010, February 28). Interview by O. Bedoya, M. Pegg and M. Quathamer.